MREL for mortgage banks reduces funding needs in times of crisis
Analysis - August 2018 - No. 11
Danmarks Nationalbank's calculations show that the mortgage banks' total funding need in periods of diving house prices will be smaller with an MREL than without an MREL. This is because an MREL will increase the mortgage banks' funding need in normal times, thereby ensuring that they are better prepared for periods of falling house prices and an increasing top-up collateral requirement. This will make the funding needs of the mortgage banks less sensitive to house price fluctuations.